Financial guys - a question of gold

[[AK]Clay]

If you ever watch late night TV, they have these cheesy ads encouraging you to buy gold. The claim is always that gold prices are going up and that it's such a great investement. I've noticed these ads over the last 10 years if not longer. Long enough, that I think we have data to actually confirm if the claim is true - which is that gold was a great investment. What do the financial and banking guru's here say: Was the claim true from 10 years ago that Gold is one of the best investments you can make? How about today - is it likely to still be so? (if it was at all)?

My problem with investing in gold is that it essentially has no intrinsic value. It's valuable because people think it is. It's not a corporation of a bunch of experts that you can use to build bridges or educate people. You can't eat it, drive your car with it, etc. Things that are valuable only because other people say they are fill me with a discomfort as an iinvestment.

[[AK]Bribo]

If you look at gold prices over the last 20 years the prices have been all over the place. Go to this site and select the 5-year chart for all the time periods (bottom left). http://www.kitco.com/charts/historicalgold.html

Overall, does not seem like a great investment to me.

[[AK]Rocks]

Let put it this way if I brought 1oz of gold for the going price the year 2000 for $282 and sold it tomorrow, for the going rate of $790. I would have a nice $508 dollars in profit. If I had taken the same $282 and put into a 3 percent savings account I had have rougly 355 dollars now. Profit of 68 dollars. Compared to if I took the 282 and brought Bankofamerica stock $25 share in the year 2000. That would have given me 11.28 shares, but we will call it 11 shares. That shares each would be (22 now, since a 2004 stock spilt) if sold today would go for $48.28 (as high as 55 this year) or a profit of $384.12.

Gold still looking good right now, but thats not the whole story. Lets add in the earnings per share and for the sake of that these are treated as investments, we buy more shares with earnings. On avgerage BAC pays about 4.50 per share each years. In 2004 there was a 2 for 1 stock split so the investment looks like this. Your total divends for since the year 2000 would roughly be $994 dollar which would have bought you almost 23 new share of BAC. Then you would have a total of 55 of BAC. 55 shares at 48.28 is $2655.54 worth.. Profit of $2374. Welcome to the power of wall street if you want to take risks, just like the gold market. Bottomline its your call.

Summary of profit:
Saving account $68
Gold (today) $508
BAC stock $2374

Your mileage may vary. I did this quickly so, hopefully the math is good, but for me, if you want to take a Risk with money, take with one that pays dividends and re-invest it.

[[AK]Hylander]

I've never been a huge commodities investor myself. I've dabbled in a few investments here and there and hedged with some puts and calls, but nothing in terms of a major investment. However, I always thought it would be cool to have a large bar (10oz or above) or biscuit just for the sake of saying you had one. Put it in a safe and surround it with some Krugerrand and feel like your rich.

There are so many different ways to invest in Gold whether it be ETF/Futures or actual physical ownership. But I don't have any problem with anyone who includes it as part of their investment portfolio depending on which method of holding they choose. I've always thought of gold as a 'hedge' investment verse a growth investment - although you can most certainly make money on gold if you have a long term horizon or time the market right. But unlike a company when you buy a stock, you can't really look at Gold's cashflow, balance sheet, business plan, etc to analyze it.

[[AK]Hylander]

Let put it this way if I brought 1oz of gold for the going price the year 2000 for $282 and sold it tomorrow, for the going rate of $790. I would have a nice $508 dollars in profit. If I had taken the same $282 and put into a 3 percent savings account I had have rougly 355 dollars now. Profit of 68 dollars. Compared to if I took the 282 and brought Bankofamerica stock $25 share in the year 2000. That would have given me 11.28 shares, but we will call it 11 shares. That shares each would be (22 now, since a 2004 stock spilt) if sold today would go for $48.28 (as high as 55 this year) or a profit of $384.12.

Gold still looking good right now, but thats not the whole story. Lets add in the earnings per share and for the sake of that these are treated as investments, we buy more shares with earnings. On avgerage BAC pays about 4.50 per share each years. In 2004 there was a 2 for 1 stock split so the investment looks like this. Your total divends for since the year 2000 would roughly be $994 dollar which would have bought you almost 23 new share of BAC. Then you would have a total of 55 of BAC. 55 shares at 48.28 is $2655.54 worth.. Profit of $2374. Welcome to the power of wall street if you want to take risks, just like the gold market. Bottomline its your call.

Summary of profit:
Saving account $68
Gold (today) $508
BAC stock $2374

Your mileage may vary. I did this quickly so, hopefully the math is good, but for me, if you want to take a Risk with money, take with one that pays dividends and re-invest it.

Investing in BAC stock is very risky, particular since you had the 32% drop in earnings when you hired Bribo back - must have been one hell of a raise he got to come back! But if you can get enough suckers, I mean non-customers, to pay $3.00 per transaction on your ATM network, you're earnings could be solid!

[[AK]Squidly]

Put the money in a 401k. Forget about it until retirement. Your profits will far outstrip anything you'll accomplish by buying and holding a metal.

If you don't have access to a 401k, there are other vehicles you can use.

Gold's a safe play, but not a great one over the long haul.

[[AK]Hylander]

Put the money in a 401k. Forget about it until retirement.

Umm.. NO. That's the mistake too many people make. You need to stay informed on where your money is invested inside the 401K and make adjustments as necessary just like any other investment. This is particularly important when you have options outside just company stock, and even more important if you have stock options and you don't want to lose all your equity value. If you are at a large company, some use their own stock to match employee contributions, and then restrict the employees ability to sell those shares - which really sucks. But you can always sell shares of your company which you purchase with your own contributions, and sometimes it's a smart thing to do since tax consequences are generally not a factor.

[[AK]Rocks]

Investing in BAC stock is very risky

Investing in the stock market is Risky ,,, period

[[AK]Hylander]

Investing in the stock market is Risky ,,, period

Not when you own Apple and Google with stop losses.

[[AK]Nuts]

The Franklin Mint. 'Nuf said.

[[AK]Hylander]

The Franklin Mint. 'Nuf said.

Yeah, I've been meaning to buy one of those Franklin Mint Collector's Edition Monopoly sets.

[[AK]Squidly]

Umm.. NO. That's the mistake too many people make. You need to stay informed on where your money is invested inside the 401K and make adjustments as necessary just like any other investment.

I really don't want to get into a long discussion about 401k strategy, that sort of thing really wasn't my point.

How you handle your 401k diversification depends on a variety of variables including the funds in question and your time to retirement.

Point is - stick it in there and don't worry about what you might be missing in the gold market.

[[AK]Hylander]

Point is - stick it in there and don't worry about what you might be missing in the gold market.

Well then say that next time because it has a totally different meaning than:

Put the money in a 401k. Forget about it until retirement.

[[AK]Squidly]

Well then say that next time because it has a totally different meaning than:

Given the broad spectrum of options available in most 401Ks, frankly its self-evident that there is more to it than simply "sticking it in there."

Keep going, I want to fight over this too...

[[AK]Hylander]

Given the broad spectrum of options available in most 401Ks, frankly its self-evident that there is more to it than simply "sticking it in there."

Keep going, I want to fight over this too...

Squidly likes to dish out 'tweaks', he just isn't very good at getting it back.